The Business Week Effect: Watch for Microvision's High Open Tuesday

| About: Microvision, Inc. (MVIS)

Microvision (NASDAQ:MVIS) is a small company involved in the development of light scanning technologies for high-resolution displays and imaging systems. The company provides its partners with integrated photonic modules that are used as the display and imaging engine for a variety of products.

Microvision has a market cap of about $132 million, $14 million in cash, and about $5 million in debt. The company has had flat revenues and has lost about $30 million a year for the last three years.

This week’s Inside Wall Street column in Business Week has a positive article about Microvision. The article focuses on Microvision’s prototype cell phone projector that was unveiled at the Consumer Electronics Show in Las Vegas last month. The article mentions that Microvision is in talks with major cell phone manufacturers about potential partnerships for this product.

Recently, some of the small companies that have been featured in Business Week’s Inside Wall Street column have received significant positive moves as a result of these articles. Access Pharmaceuticals (Pending:ACCP) was a big beneficiary of the Inside Wall Street column as it soared over 200% after being mentioned in Inside Wall Street.

Our previous trades based on the Business Week effect have performed well including Thermage (NASDAQ:THRM), American Oil & Gas (AEZ), and Shanda (NASDAQ:SNDA).

This “Business Week effect” does not necessarily last long, but it has recently proved to give certain small cap stocks a consistent boost at the start of Monday’s trading. Although the Business Week articles are available on-line on Thursday evening, we believe that the effect a Business Week Inside Wall Street article can have on a stock is often more pronounced on Monday, after the print version of Business Week has been circulated. Certain stocks with small floats and low average trading volumes tend to have a strong open on Monday after readers see the articles in Inside Wall Street over the weekend. We believe that Microvision is one of these stocks and that Microvision will open higher on Tuesday (the market is closed today).

We are not expecting a huge move out of Microvision at the open on Tuesday as Microvision’s average trading volume is higher than most of the companies that have really moved based on the Inside Wall Street articles. However, the underlying technology profiled in the Microvision article is enticing and should lead to increased investor attention on Tuesday morning.

We do not have any idea if Microvision’s cell phone projection display technology is viable and can be turned into a money making commercial application. However, the correlation between these Business Week articles and the underlying stock movement on Monday has been clear lately and we think Microvision will continue this trend.

  • Buy MVIS near $3.34
  • Sell MVIS at or near the open on Tuesday
  • MVIS 1-yr chart

    Disclosure: Author is long MVIS and plans on selling MVIS on Tuesday.